Changing of the Guard: the Influence of CEO Socialization on Strategic Change

Abstract

This paper utilizes socialization theory to describe why some chief executive successions lead to a change in a firm's strategic direction and others do not. We argue that socialization theory permits the identification of a constellation of individual and situational characteristics that can drive or restrain strategic change following succession. Specifically, we develop a framework of how differences in chief executives' prior work experience, educational background, personal characteristics, and differences in the role's requirements and socialization agents' characteristics, can all serve as forces driving or restraining the likelihood of strategic change. This perspective goes beyond the distinction between a successor's origin as an organizational insider or outsider used in previous research to explain the strategic implication of chief executive succession. It provides a description of an underlying process – socialization – that constitutes a theoretical rationale for the link between executive successions and strategic outcomes.